Healthcare Business News

Appeals court ends 'red flags' saga

By Andis Robeznieks
Posted: March 7, 2011 - 2:15 pm ET

Citing the "mootness doctrine," the U.S. Court of Appeals for the District of Columbia Circuit ended the saga (PDF) of the "red flags" rule, stating that, with the December passage of the Red Flag Program Clarification Act of 2010, there was no point in carrying on with lawsuits protesting the Federal Trade Commission's decree that doctors and lawyers were subject to the same anti-identity theft regulations as banks.

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"Intervening legislation simply nullified the FTC's policy statement that all lawyers who bill their clients after services are rendered are covered by the Red Flags Rule …" the opinion concluded. "In sum, this case is moot due to the enactment of intervening legislation."

Based on the fact that lawyers and healthcare providers "regularly permit deferred payments for goods or services," the FTC had ruled that these professional offices fit the definition of "creditor" and, like a bank, had to have written procedures in place to prevent, identify and mitigate identity theft and to train staff to follow those plans.

The American Bar Association and a coalition of medical societies filed lawsuits fighting the FTC. While the court was specifically ruling on the ABA suit, the American Medical Association said in a news release that its lawsuit "will now formally end."

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